HF Foods Group (HFFG) risk factors, FY2024 10-K

Other

1. 01Our industry is characterized by low margins, and periods of significant or prolonged inflation or deflation affect our product and operational costs, which may negatively impact our profitability
2. 02Changes to U.S. trade policy, tariff and import/export regulations may adversely affect our operating results
3. 03A shortage of qualified labor or an inability to attract, train or retain employees could negatively affect our business and materially reduce earnings
4. 04Unfavorable macroeconomic conditions in the U.S. may adversely affect our business, financial condition and results of operations
5. 05Competition may increase in the future, which may adversely impact our margins and ability to retain customers, and make it difficult to maintain our market share, growth rate and profitability
6. 06We may not be able to fully compensate for increases in fuel costs when fuel prices experience high volatility, and our operating results would be adversely affected
7. 07We rely on third-party suppliers, and our business may be affected by interruption of supplies or increases in product costs
8. 08transported globally. Our inability to anticipate and react to changing food costs through our sourcing and purchasing practices in the future could therefore negatively impact our business, financial condition or results of operations
9. 09Our relationships with customers may be materially diminished or terminated. The loss of customers could adversely affect our business, financial condition, and results of operations
10. 10We rely on technology in our business and any cybersecurity incident, other technology disruption or delay in implementing new technology could negatively affect our business and our relationships with customers
11. 11liability and regulatory action under data protection and privacy laws. Any such cybersecurity incident involving our or our suppliers’ cybersecurity infrastructure could have a material adverse effect on our business, results of operations and financial condition
12. 12Changes in consumer eating habits could materially and adversely affect our business, financial condition, and results of operations
13. 13We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us
14. 14We may be unable to protect or maintain our intellectual property, which could result in customer confusion, a negative perception of our brand and adversely affect our business
15. 15If we are unable to renew or replace our current leases on favorable terms, or any of our current leases are terminated prior to expiration of their stated terms, and we cannot find suitable alternate locations, our operations and profitability could be negatively impacted
16. 16Turnover among our senior management, directors and other key personnel may create uncertainty and adversely affect our operations
17. 17Changes in and enforcement of immigration laws could increase our costs and adversely affect our ability to attract and retain qualified employees
18. 18Potential labor disputes with employees and increases in labor costs could adversely affect our business
19. 19If we fail to comply with requirements imposed by applicable law and other governmental regulations, we could become subject to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business
20. 20If the products distributed by us are alleged to have caused injury or illness, or to have failed to comply with governmental regulations, we may need to recall our products and may experience product liability claims
21. 21Litigation may materially adversely affect our business, financial condition and results of operations
22. 22An increase in interest rates could adversely affect our cash flow and financial condition
23. 23Impairment charges for goodwill, amortizable intangible assets or other long-lived assets could adversely affect our financial condition and results of operation
24. 24Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation
25. 25Our continued growth depends on future acquisitions of other distributors or wholesalers and enlarging our customer base. The failure to achieve these goals could negatively impact our results of operations and financial condition
26. 26There is a scarcity of and competition for acquisition opportunities

Risks related to acquisition financing

1. 27We may experience difficulties in integrating the operations, personnel and assets of acquired businesses that may disrupt our business, dilute stockholder value and adversely affect our operating results
2. 28We have identified material weaknesses in our internal control over financial reporting, which could affect our ability to ensure timely and reliable financial reports, affect the ability of our auditors to attest to the effectiveness of our internal controls, and weaken investor confidence in our financial reporting
3. 29Zhou Min Ni has significant influence over the Company and may have interests that conflict with those of our other shareholders
4. 30Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors
5. 31In addition, in April 2023, we implemented a stockholder rights plan, also called a “poison pill,” that may have the effect of discouraging or preventing a change of control by, among other things, making it uneconomical for a third party to acquire us without the consent of our board of directors